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Answer to Example 10
1-6year 7p.a. and 6year 110 came from where? please helpAnswer to Example 10
Cost of debt = IRR =5% + 12.59/12.59 + 12.47
× 5% = 7.51%why we use 5% twice it should not be 10%at the end ?
12.47 is negative figure its matter in this formula or we always use just positive figure
ThanksSorry, but you need to watch the lectures – there is no point in using the notes if you are not watching the lectures.
The second 5% is the difference between the two guesses of 10% and 5% !!
And, if you watch the lectures (especially those for F9 and F2 as well, because this is revision) you will realise that best is to have a positive and a negative NPV.
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